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Dec 14, 2016

European Markets Closing Report on December 14, 2016: European Markets Close Lwer as Investors Await Fed Decision; Actelion Down 9.5%
Silvia Amaro, Sam Meredith
European markets closed lower on Wednesday as investors focused on an upcoming rate decision by the U.S.Federal Reserve.

Actelion shares down 8%

The pan-European Euro Stoxx 600 provisionally ended 0.38 percent lower on Wednesday with most sectors in negative territory. The continent's major bourses were also trading lower. Healthcare stocks were among the worst performers, contracting 0.72 percent by the close. Media reports suggested that Johnson and Johnson was dropping its bid to acquire Actelion and the Swiss firm's shares ended more than 9.5 percent lower.
Utilities closed 0.59 percent down after Deutsche Bank slashed its target price for United Utilities Group. Meanwhile, stocks in the banking and financial services sectors were also down as concerns with the sustainability of Italian banks persist. Moody's updated its outlook on Italian banks from "stable" to "negative" on Tuesday on increasing capital needs and a weakening in confidence in the system.
Meanwhile in the U.S., the Dow Jones industrial average continued fractionally lower after closing more than 100 points higher and hitting a new record high in the previous session.

Fed ahead

The focus for investors on Wednesday was the impending rate decision by the Fed. Analysts expect a rate hike of 25 points basis (bps) from the central bank with the announcement set to come after European markets close on Wednesday.
"The (Fed's) committee seems bound to increase the target range for the Fed Funds Rate by 25bps to 0.50-0.75 percent – indeed not to do so would be harmful for the Fed's credibility. And Yellen's press conference and updated forecasts will, of course, be closely scrutinized for insights into the near-term policy outlook," Emily Nicol, an economist at Daiwa Capital Markets, said in a morning note.
Also on Wednesday, the Spanish company Inditex reported a net profit of 2.2 billion euros ($2.34 billion) for the nine months from February to October. Its shares were down by 2.5 percent at about 1 p.m. U.K. time.
Dixons Carphone surprised on Wednesday with a 19 percent rise in its first-half profit thanks to strong sales in the U.K. Its shares fell 6.4 percent in late morning trade.

U.K. employment rate drops

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On the data front, the United Kingdom reported a drop in the number of people in employment in the third quarter of 2016 - the first fall in more than a year. However, the unemployment rate remained unchanged at 4.8 percent.
The euro zone posted a contraction in industrial output in October, despite expectations of a slight rise. Data from the European statistical office showed industrial production falling by 0.1 percent in October, though the numbers were up by 0.6 percent on the year.